Structural unemployment

This is what I meant when I kept saying Obama didn’t have executive ability. People retorted that he ran an effective campaign, and I gave up trying to explain at that point, because the candidate really has very little to do with running the campaign other than his input into staff hiring, and Tom Daschle made most of those major decisions.

Obama would rather preside over a graduate seminar than make hardnosed political decisions, and that continues to be a major flaw. Krugman:

Mark Thoma directs us to an appalling story — apparently Obama held a meeting after the midterm to debate whether our unemployment problem is cyclical or structural.

What I want to know is, who was arguing for structural? I find it hard to think of anyone I know in the administration’s economic team who would make that case, who would deny that the bulk of the rise in unemployment since 2007 is cyclical. And as I and others have been trying to point out, none of the signatures of structural unemployment are visible: there are no large groups of workers with rising wages, there are no large parts of the labor force at full employment, there are no full-employment states aside from Nebraska and the Dakotas, inflation is falling, not rising.

More generally, I can’t think of any Democratic-leaning economists who think the problem is largely structural.

Yet someone who has Obama’s ear must think otherwise.

No wonder we’re in such trouble. Obama must gravitate instinctively to people who give him bad economic advice, and who almost surely don’t share the values he was elected to promote. That’s what I’d call a structural problem.

5 thoughts on “Structural unemployment

  1. So, if it’s cyclical – then no biggie. We wait it out. And O doesn’t have to do anything – except pretend he’s NBA worthy (ha!).

    What is wrong with these people? Do they think those of us without work are content to wait it out – with no money, etc. – because it’s merely cyclical? The stupidity, it burns.

  2. Let’s compare: Hoover to Obama.

    Hoover did not have the history of what was learned about the Great Depression to help him try to figure out what to do about it when he became president. His tendency was to try to stimulate employment, but everything he knew about business practices and what he was told by the eminent economists was that his efforts would not succeed. And he was swayed by the established wisdom.

    Obama did have knowlege of what was done both by Hoover and then by FDR. He apparently understood this well enough to campaign using words that left the public to believe he would be more like FDR than like Hoover. Yet, he is apparently out-Hoovering Hoover on his move to current rightwing conervative actions. And Obama ran as a Democrat, claiming the mantle of FDR (while praising Reagan, of course; some of us noticed that and worried about it) and promising hope and change. Alas, given Obama’s actions I would say he is, as of now, officially Worse Than Hoover.

    Worse than Bush, who was Worst President Ever (or at least worst president of modern times)? There’s still time.

  3. How much he cares: Should we do anything about unemployment AFTER being publicly rebuked and humiliated by the voting public.

  4. Mark Zandi, an economist on The Diane Rehm Show today, said to just let things continue as it and there might likely be more jobs by 2014-15. Wages might even increase….

    From the transcript (audio available):

    ZANDI 10:53:03 Well, the way this should work and has worked historically and, I think, will work going forward is that businesses are now quite profitable. They have a lot of cash. They’re good — in good financial shape. And again, I’m speaking in aggregate. Small businesses aren’t doing as well as big businesses, but in aggregate. They are beginning to hire more aggressively. I do anticipate that they will hire even more aggressively as we make our way through this time next year into 2012 and ’13. This will bring down the unemployment rate. And as the unemployment rate begins to decline, then wages will begin to rise more quickly, that labor will have more of a negotiating stance, more power in their negotiations, and we’ll see wages rise.

    ZANDI 10:53:44 And this will — when we get to 2013, ’14, ’15, that the economy will be operating pretty close to where everyone will be pretty comfortable with. And in this dynamic I just described is something that is very typical. It happens in every business cycle in the wake of every recession. This one’s a little atypical because of the severity of what we’ve been through, but the same dynamic is in place. And I think we’ll see wage growth begin to improve as unemployment comes down.

    This might be one answer to Paul Krugman’s question as to which economist has Obama’s who would call the present employment situation structural.

  5. Mark Zandi works for Moody’s — you know, the same company that rated Big Shitpile as AAA? He was John McCain’s economics advisor.

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